Trump now supports Nippon Steel's $14B merger with US Steel
What's the story
US President Donald Trump has thrown his weight behind a $14.1 billion partnership between US Steel and Japan's Nippon Steel.
Initially facing regulatory hurdles and political opposition, the deal is now being viewed as a potential game-changer in US industrial policy.
Trump announced the endorsement on Truth Social, calling it a partnership that could boost the American economy by billions of dollars and create 70,000 jobs in 14 months.
Negotiations ongoing
Deal details remain unclear despite Trump's endorsement
Despite Trump's endorsement, key elements of the deal remain under discussion.
Executives from both companies are looking for clarification from the White House on how much ownership Nippon Steel can take.
The term "partnership" has added uncertainty, insiders involved in the negotiations said, adding that discussions with the Trump administration are ongoing.
Board structure
Nippon Steel to have independent board for North American operations
Under the proposed deal, Nippon Steel would set up an independent board to supervise its North American operations.
The board would mostly comprise US citizens and would be overseen by a federal regulator.
The company has promised major investments in steel mills and facilities in Indiana and near Pittsburgh, and is also planning to set up a new mill at an undisclosed location.
Change of heart
Trump's support marks a shift in stance
Trump's endorsement marks a major departure from his earlier opposition to the deal.
Both Trump and former President Joe Biden had initially raised concerns over foreign ownership of a key American industry.
However, after a second national security review ordered by Trump in April ended this week with a report by the Committee on Foreign Investment in the US (CFIUS), he has changed his mind.
Stock surge
Market reacts positively to Trump's endorsement of merger
Following Trump's announcement, US Steel's stock soared over 21% to $52.01, close to Nippon Steel's proposed price of $55 per share.
Other steel competitors, including Cleveland-Cliffs and Steel Dynamics, witnessed a dip in stocks.
Despite the positive market response, organized labor remains a major hurdle, with the United Steelworkers union opposing it over fears of job losses from Nippon Steel's history of cheap imports.
Labor agreements
Nippon Steel commits to honoring labor contracts until 2026
Responding to concerns raised by the United Steelworkers union, Nippon Steel has promised to honor labor contracts till 2026.
The company also promised not to lay off any workers or close plants during this period.
The commitment comes as part of a larger strategy for Nippon Steel, the world's fourth-largest steel producer, to counter declining Japanese demand and expand its global presence.